Supply

The supply of warehouse space in Scotland for units larger than 100,000 sq ft has risen by 51% in the past 12 months to stand at 1.61m sq ft across ten units. According to the three-year average annual take-up, there is 1.6 years' worth of supply in the region.

The supply continues to be dominated by second-hand space with no newly developed units available. Currently, 23% of all space on the market is classified as Grade B and 77% is classified as Grade C. As is the case throughout the UK, many of these Grade C units are unsuitable for modern occupiers.

Of the ten units currently available, six are within the 100,000–200,000 sq ft size band, and four are within the 200,000–300,000 sq ft size band.

RealFor, an economic forecaster, is predicting that rental growth will reach an average of 3.1% per annum over the next five years. Due to the lack of good quality stock, Savills expects rental growth to exceed this on premium buildings through increased competition.

Take-up

Take-up of units over 100,000 sq ft in 2022 has been subdued. We have recorded a single transaction over 100,000 sq ft. The unit was 100,000 sq ft of Grade A built-to-suit space, highlighting occupiers' preference for better quality units.

Take-up continues to be constrained by both shortages in the size and quality of available units throughout the region; occupiers are having to settle for lower quality, and smaller-sized units to satisfy their requirements, generally, these fall just short of 100,000 sq ft. However, Savills has c.230,000 sq ft in Milngavie, Glasgow under offer to purchase which should conclude in Q3. Our industrial team is also involved in acquiring c.150,000 sq ft in Eurocentral with this building similarly under offer.

Development pipeline

As previously mentioned, the strong levels of requirements within Scotland, paired with multiple large deals close to completion, is providing developers with confidence, consequently a number of key sites are being closely considered for speculative development. However, as it stands there are no current new speculative facilities over 100,000 sq ft proposed or currently available. The Scottish market remains more typically focused on sub 100,000 sq ft speculative schemes going forward.

Typically, the multi-let industrial estate market is performing extremely well across all locations, with any refurbished space mostly letting up very quickly following availability and works completion.

_{Read the articles within Big Shed Briefing below.}